P. v. Verma

Filed 7/31/07 P. v. Verma CA1/5

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FIVE

THE PEOPLE,

Plaintiff and Respondent, A114721

v. (San MateoCounty

Super. Ct. No. SC057751)

JAI VERMA,

Defendant and Appellant.

______________________________________/

Jai Verma appeals from a judgment entered after a jury convicted him of grand theft by embezzlement. (Pen. Code,  487, subd. (a), 508.)^[1] He contends (1) his conviction is not supported by substantial evidence, (2) the trial court instructed the jurors incorrectly, and (3) the court may have committed an error when imposing a restitution fine. We reject these arguments and affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

Appellant, who was a travel agent, embezzled over $400,000 from China Airlines. The evidence at trial showed appellant committed his crime as follows:

Appellant owned and operated a travel agency in San Francisco known as Free World Travel. Free World Travel had a contract with the Airlines Reporting Corporation (ARC), a corporation that is owned and operated by a consortium of major airlines. The contract, known as an Agent Reporting Agreement (ARA), allowed Free World Travel to sell tickets for member airlines. Under the ARA, when a travel agent issues a ticket, the agent must deposit the funds received less the agents commission, into a designated bank account. The ARA states specifically that the funds are the property of the carrier and that the agent must hold them in trust until accounted for to the carrier.^[2] The agent must report all ticket sales to ARC on a weekly basis. Within 10 days of the agents report, ARC draws funds from the designated bank account based on the agents report and distributes them to the appropriate member airlines. An agent does not violate the ARA by paying business expenses out of the designated account, or by delaying a deposit, so long as sufficient funds are available in the account when ARC drafts on it. However, if the agent does not report a ticket sale, ARC has no way of knowing that the sale has occurred and the corresponding airline is not being paid.

China Airlines is a member of ARC. When a passenger flies on China Airlines, the airline collects the passengers ticket at check-in and issues a boarding pass. The used tickets then are routed to an accounting office to be reconciled with ticket sales reported by the ARC.

In March 2002, David Lo, a China Airlines accounting employee, discovered that China Airlines had not been paid for 46 tickets issued by Free World Travel that were used for travel between October 2001 and March 2002. Using full-fare pricing as was the companys policy, Lo calculated that China Airlines had lost $54,315.20, as a result of these tickets. Lo compiled a debit report showing the unreported tickets and sent it to China Airlines San Francisco office. In the months that followed, Lo prepared additional debit memos that showed Free World Travel had failed to report a total of 449 tickets that were used by passengers on China Airlines flights. Lo had never encountered such a large amount of unreported ticket sales.

China Airlines reported the debit memos to Nancy Day, a senior auditor for ARC. Day met with appellant on March 26, 2002. She audited appellants records and determined it was possible he had issued $880,000 in tickets for which China Airlines had not been paid. When appellant was not able to explain why he had not paid for the tickets, Day confiscated appellants unused ticket stock and placed Free World Travel into default.

Subsequently Day determined that the tickets appellant issued between October 2001 and March 2002 resulted in a $440,531.20 loss for China Airlines.

On November 21, 2002, and then again on December 6, 2002, Day and Sheriff Detective Rich Glennon interviewed appellant at his home. Appellant admitted he had not always reported his ticket sales to China Airlines on time. He said he delayed reporting the sales not because he intended to keep the money, but to keep his business afloat. However, appellant also admitted that he used the proceeds from some ticket sales to support his lifestyle and to pay off his personal debts.

Based on these facts an amended information was filed charging appellant with grand theft by embezzlement. ( 487, subd. (a), 508.) The information also alleged, as an enhancement, that appellant had embezzled more than $150,000. ( 12022.6, subd. (a)(2).)

The case proceeded to trial where the prosecution presented the evidence we have set forth above. Appellant testified in his own defense. He said he never issued a ticket without intending to pay for it, and that he always intended to pay for the tickets he did not report on time. According to appellant, it would typically take China Airlines six months to one year to issue a debit memo. However, after the attacks on September 11, 2001, China Airlines began issuing debit memos within one to two months. Appellant also disputed the number of unreported tickets he had sold. He estimated the true number was around 200 and he estimated that the loss to China Airlines was about $127,000 when his commission agreement was taken into account. Appellant believed Nancy Day was crooked and that she had falsified records.

The jurors rejected appellants defense and found him guilty of grand theft by embezzlement. The jurors also found the enhancement allegation to be true. Subsequently, the court sentenced appellant to four years in prison, and ordered him to pay $354,547.70 to China Airlines as restitution.

II. DISCUSSION

A. Sufficiency of the Evidence

Appellant contends his embezzlement conviction must be reversed because it is not supported by substantial evidence. The standard we apply when evaluating this argument is familiar. We must review the whole record in the light most favorable to the judgment below to determine whether it discloses substantial evidence--that is, evidence which is reasonable, credible, and of solid value--such that a reasonable trier of fact could find the defendant guilty beyond a reasonable doubt. (People v. Johnson (1980) 26 Cal.3d 557, 578.)

Here, appellant contends the evidence was insufficient to support one of the elements of an embezzlement charge: a relationship of trust. A relationship of trust and confidence is essential to embezzlement. (2 Witkin & Epstein, Cal. Criminal Law (3d ed., 2000) Crimes Against Property,  28, p. 48.) The defendant must be some kind of fiduciary to whom the property is entrusted . . . . (Ibid.) However, this requirement must not be narrowly construed . . . . (Ibid.) Under California law, embezzlement has never been limited to strict trustees but has been extended to a wide variety of fiduciaries including public officers and employees, including those who take money based upon a voluntary trust, the officers and agents of a corporation or association, persons entrusted with property under a power of attorney, ordinary agents and employees, carriers, a conditional buyer or lessee, the debtor under a security agreement, a tenant or lodger, partners, and involuntary trustees. (2 Witkin & Epstein, Cal. Criminal Law, supra,  28-29, pp. 49-51.)

In People v. Cook (1959) 167 Cal.App.2d 247, the court applied these principles when faced with similar facts. The defendants in Cook were travel agents who had an agreement with Air France to sell travel tickets. Under the agreement, the defendants would notify Air France when a local client wished passage on the latters facilities. Air France would then forward the requested ticket made out in the passengers name. The defendants would deliver the ticket to the customer, collect the price of the ticket and remit the same in its entirety to Air France. (Id. at p. 249.) Acting pursuant to this agreement, the defendants requested and obtained tickets from Air France for clients, and provided those tickets to the clients in exchange for a check. However, the defendants did not remit the check to Air France. Instead, they cashed the check and absconded with the funds. (Ibid.) On appeal, the Cook court ruled those facts supported a grand theft conviction under an embezzlement theory: Under such facts the jury could properly find, as it did, that defendants had appropriated for their own use money which they had collected for the payment of the fare and therefore defendants were under a fiduciary duty to deliver the funds to the air lines and their failure so to do would support a conviction of embezzlement. [Citations.] (Id. at pp. 249-250.)

We reach a similar conclusion here. Appellant was allowed, under the terms of the ARA, to sell tickets on behalf of China Airlines. Under the terms of that agreement, appellant was obligated to hold the funds he received in trust, to place them in a designated account, and to report his sales to ARC on a weekly basis. If appellant did not report his sales, ARC would have no way of knowing that a sale had occurred and China Airlines would not be paid. The evidence presented at trial showed appellant did not fulfill his obligations. He sold, but did not report, 449 tickets that were used for travel on China Airlines, and used the money for his own benefit. As a result, China Airlines lost $440,531.20. As in Cook, the jury could properly find, as it did, that [appellant] had appropriated for [his] own use money which [he] had collected for the payment of the fare and therefore [appellant was] under a fiduciary duty to deliver the funds to the air lines and [his] failure so to do would support a conviction of embezzlement. [Citations.] (Cook, supra, 167 Cal.App.2dat pp. 249-250.)

Appellant contends the evidence was insufficient because California courts have held that embezzlement cannot be based on a debtor/creditor relationship (see e.g. People v. Petrin (1954) 122 Cal.App.2d 578, 581,) and he had a debtor/creditor with ARC and China Airlines, not a trust relationship. Appellant notes that the ARC contains a choice of law clause that says it shall be interpreted under the laws of Virginia, and he argues that in Airlines Reporting Corp. v. Pishvaian (E.D. Va. 2001) 155 F.Supp.2d 659 (Pishvaian), the ARA was judicially interpreted to mean that it created only a debtor/creditor relationship.

While the ARA does state it will be interpreted under Virginia law, the Pishvaian case is not controlling here. Pishvaian is a civil tort action where the Airline Reporting Corporation sued a travel agent for conversion alleging, inter alia, that he had converted the proceeds of ticket sales. To state a cause of action for conversion under Virginia law, a plaintiff is required to demonstrate that it owned or had the right to possess the property that is at issue. The plaintiff, in an attempt to fulfill that requirement, relied on language in the ARA stating the travel agent is required to hold the proceeds of ticket sales in trust. The Pishvaian court ruled that was insufficient, A review of the ARA compels the conclusion that the relationship between the parties with respect to the ticket sales proceeds is not one of trust, but rather a debtor-creditor relationship. This is so because, with respect to ticket sales proceeds, critical aspects of a trust relationship under Virginia law are absent from the agreement. Specifically, contrary to Virginia law, the ARA (i) does not prohibitindeed allowspermissive commingling of trust assets with general assets of the agency; and (ii) does not contain restrictions on the use of these funds. The absence of these requirements in the ARA reflects an apparent lack of concern regarding defendants handling of the ticket sales proceeds that is fatal to any claim that the ARA creates a trust as to the proceeds. (Id. at pp. 664-665, fn. omitted.)

When read in context, Pishvaian simply stands for the proposition that the ARA does not create a formal trust relationship under Virginia law as to the proceeds from the sale of tickets. The trial courts analysis in Pishvaian is not controlling here because under California criminal law, embezzlement has never been limited to appropriations made by a person standing in a formal or strict trust relationship. (2 Witkin & Epstein, Cal. Criminal Law, supra,  28, p. 48.) Under Californias extremely broad criminal statutes, (2 Witkin & Epstein , Cal. Criminal Law, supra,  29, p. 49), appellant may be found guilty of embezzlement even though he might not have been in a formal trust relationship under Virginia civil law.

For similar reasons, we are not persuaded by appellants reliance on In re Morales Travel Agency (1981) 667 F.2d 1069 (Morales). There a travel agency declared bankruptcy and Eastern Airlines filed a petition in the bankruptcy proceeding seeking to recover $379,482.29 it was owed for tickets the agency had sold. Eastern Airlines argued that under the terms of its agreement with the agency, the proceeds of tickets sales were its property and that they were held in trust by the agency. The Morales court disagreed, The terms of the IATA Agreement and Resolutions were inadequate, in our view, to give rise to a trust upon the proceeds from tickets sold by Morales to its customers. To be sure, Resolution 820(a) recited, in general terms, that the agent was to hold whatever monies it collected in trust for the carrier until accounted for, and that these monies were the carriers property until settlement occurred. However, talismanic language could not throw a protective mantle over these receipts in the absence of a genuine trust mechanism. Here the relationship remained in practical fact that of debtor-creditor. The contract nowhere required Morales to keep the proceeds of Easterns ticket sales separate from any other funds, whether Morales own funds or the proceeds of other airlines ticket sales. Nor was any specific restriction placed upon Morales use of the supposed trust funds. Morales was left free to use what it received for its own benefit rather than Easterns, and to transform the receipts into assets with no apparent encumbrance, upon which potential creditors might rely. The use of the word trust and the designation of the airline as title-holder, in a contract which is not publicly filed, would not save potential creditors from relying on such assets as office equipment, accounts receivable, and a bank account solely in the name of the agency. In the absence of any provision requiring Morales to hold the funds in trust by keeping them separate, and otherwise restricting their use, the label trust could in these circumstances and for present purposes have no legal effect. (Id. at p. 1071, fn. omitted.)

Again, when read in context, Morales simply stands for the proposition that the agreement at issue did not create a formal trust relationship. The case is not controlling here because under California criminal law, a defendant may be found guilty of embezzlement even if a formal trust relationship does not exist.

Next, appellant contends the evidence was insufficient because a plethora of factors in the ARA itself, as well as in the testimony of . . . Nancy Day, weigh against the ARA being construed to create a trust relationship and in favor of it being construed to create a debtor-creditor relationship. Among other things, appellant relies on the fact that the ARA is not described as a trust agreement, that travel agents are described in the agreement as agents and not trustees, that the ARA lists 17 different ways the agreement may be breached none of which mentions the word trust, that Day admitted the designated bank account is not a trust account, and that under the ARA, an agent can do what ever he wants with ticket sale proceeds so long as the funds are available 10 days later when the ARC draws against them.

The evidence appellant cites would have supported the jurors verdict if they had found appellant did not occupy a position of trust. However that is not what the jurors found. By convicting appellant the jurors impliedly found appellant did occupy a position of trust and that conclusion is supported by substantial evidence. If the record contains substantial evidence from which a reasonable trier of fact could have found the essential elements of the crime proved beyond a reasonable doubt the possibility that the trier of fact might reasonably have reached a different conclusion does not warrant reversal. [Citation.] (People v. Taylor (2004) 119 Cal.App.4th 628, 639.)

Next, appellant argues that the mere fact that a creditor trusts a debtor to hold the creditors money or property does not transmogrify their relationship into a trust relationship that would support a charge of embezzlement. Appellant then describes a variety of commercial relationships, such as a credit card holder, a rental car customer, and a banker, where the creditor trusts the debtor to hold the creditors money or property. It might be true that some of the relationships appellant describes would not support an embezzlement charge. However, as we have explained, substantial evidence supports the conclusion that appellant was in a position of trust. The fact that other commercial relationships might not support an embezzlement charge is irrelevant.

We conclude appellants conviction is supported by substantial evidence.^[3]

B. Instructions

The trial court instructed the jurors on embezzlement using CALCRIM 1806 as follows:

The defendant is charged in Count One with grand theft by embezzlement.

To prove that the defendant is guilty of this crime, the People must prove that:

1. An owner or the owners agent entrusted its property to the defendant;

2. The owner or the owners agent did so because it trusted the defendant;

3. The defendant fraudulently appropriated or converted that property for his own benefit;

[and]

4. When the defendant converted the property, he intended to deprive the owner of it permanently or to remove it from the owners or owners agents possession for so extended a period of time that the owner would be deprived of a major portion of the value or enjoyment of the property.

An agent is someone to whom the owner has given complete or partial authority and control over the owners property.

Appellant also asked the court to instruct with several special instructions. As is relevant, appellants Special Instruction No. 4 stated as follows: A debtor-creditor relation is not a relationship of trust and confidence. The court declined to give this instruction because it believed the standard instruction was sufficient. However, the court said counsel could argue that legal point to the jury.

Appellant now contends the trial court erred because his proposed instruction was a pinpoint instruction that the court was obligated to give.^[4]

A pinpoint instruction is one that [relates] particular facts to a legal issue in the case or [pinpoints] the crux of a defendants case . . . . (People v. Saille (1991) 54 Cal.3d 1103, 1119.) In the appropriate circumstances, a trial court may be required to give a requested jury instruction that pinpoints a defense theory of the case. (People v. Bolden (2002) 29 Cal.4th 515, 558.) However, a court may refuse an instruction that states the law incorrectly or that might confuse the jury. (People v. Gurule (2002) 28 Cal.4th 557, 659.) That is the case here. Special instruction number 4 states the law incorrectly because it suggests one who is in a debtor/creditor relationship can never be found guilty of embezzlement. The authority appellant cites demonstrates that is not true. People v. Wooten (1996) 44 Cal.App.4th 1834, 1845 states, If the relation is that of creditor and debtor merely, an appropriation by the latter does not constitute embezzlement. (Italics added.) The use of the word merely indicates that if the relationship between a creditor and debtor has additional attributes (such as an element of trust) an embezzlement can be found. Another of appellants authorities makes this even more clear. The use notes to CALCRIM 1806 state: Courts have held that [a] creditor/debtor . . . [relationship is] not presumed to be [a] fiduciary [relationship] in the absence of other evidence of trust or confidence. (Italics added.) The language we have italicized makes clear that if other evidence of trust or confidence is present, a debtor can be found guilty of embezzlement.

Special instruction number 4 also has the potential to be confusing. The instruction suggests that evidence of a fiduciary relationship may not be considered in evaluating a charge of theft by embezzlement of a creditors property by a debtor. Jurors faced with such an instruction and CALCRIM 1806 would potentially have had a difficult time determining what law they were obligated to apply. We agree with respondent that the proposed instruction would have been misleading and confusing by suggesting appellant could be acquitted merely because he owed a debt to China Airlines.

We conclude the trial court did not err when it failed to provide the special instruction he proposed because it stated the law incorrectly and might have been confusing.

Having reached this conclusion, we can distinguish the cases upon which appellant relies. Appellant cites People v. Sears (1970) 2 Cal.3d 180, 190, and similar cases for the proposition that a court is required to give a proposed pinpoint instruction which states the law correctly. Since appellants proposed special instruction did not state the law correctly, these cases do not assist him; they are distinguishable.

Appellant also argues that even if the instruction he proposed was inadequate, the court was required under People v. Stewart (1976) 16 Cal.3d 133, to give a correct instruction. However, Stewart simply states that a court is obligated to instruct, sua sponte, on the general principles of law, including defenses, that are necessary to jurys understanding of a case. (Id. at p. 140.) Stewart is not controlling here because appellants concedes an instruction on this point would be a pinpoint instruction, and it is well settled that a court is not obligated to provide a pinpoint instruction sua sponte. (People v. Rogers(2006) 39 Cal.4th 826, 878.)

C. Restitution

The trial court ordered appellant to pay $354,547.70 to China Airlines as restitution. Appellant now contends this order may have been error under Apprendi v. New Jersey (2000) 530 U.S. 466, and its progeny because a restitution fine can be considered punishment in some circumstances, and the jury did not determine the amount of restitution he should pay.

Even if we were to assume, for purposes of this argument, that a restitution fine can constitute punishment, we see no error.

In Apprendi, the United States Court held that Other than the fact of a prior conviction, any fact that increases the penalty for a crime beyond the prescribed statutory maximum must be submitted to a jury, and proved beyond a reasonable doubt. (Apprendi v. New Jersey, supra, 530 U.S. at p. 490.) The statutory maximum for these purposes is the greatest sentence the court can impose based on facts reflected in the jurys verdict or admitted by the defendant. (Cunningham v. California(2007) ___ U.S. ___, 166 L.Ed.2d 856, 873.)

Here, the jurors found appellant guilty of grand theft by embezzlement. Based on that verdict, the court was required by statute to order appellant to pay restitution based

on the losses the victim had incurred as a result of appellants conduct. ( 1202.4, subd. (f).) The court was obligated to order appellant to pay full restitution unless it [found] compelling and extraordinary reasons for not doing so . . . . ( 1202.4, subd. (f).)

Here the court ordered appellant to reimburse China Airlines $352,547.70 for the losses it had incurred as a result of his embezzlement. Since that order was based on and compelled by jurys verdict, we see no Apprendi violation. As appellant concedes, this holding is supported by a phalanx of authority. (See U.S. v. Milkiewicz (1st Cir. 2006) 470 F.3d 390, 403-404, & cases cited therein.)

III. DISPOSITION

The judgment is affirmed.

_________________________

Jones, P.J.

We concur:

________________________

Gemello, J.

________________________

Needham, J.

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^[1] Unless otherwise indicated, all further section references will be to the Penal Code.

^[2] The relevant portion of the ARA states, The Agent shall designate a bank account for the benefit of ARC and the carrier for deposit of (1) the proceeds of the sales of air transportation and ancillary services for which ARC traffic documents were issued, and (2) such funds as may be required to pay any other amount which ARC is authorized to draft from the account. The Agent recognizes that the proceeds of the sales, less the Agents commissions, on these ARC traffic documents are the property of the carrier and shall be held in trust until accounted for to the carrier. (Italics added.)

^[3] Having reached this conclusion, we reject appellants related arguments that the trial court erred when it denied his motion for acquittal at the close of evidence, ( 1118.1) and his post-conviction motion for a new trial.

^[4] Appellant also suggests the trial court erred when it failed to instruct with his Special Instruction No. 5. However, appellant has not developed his argument and he has not cited or discussed the precise language of the instruction at issue. We deem the point to be waived. (People v. Harper (2000) 82 Cal.App.4th 1413, 1419, fn. 4.)